After considering trading forex, you will need to open an account with a forex broker, but what is a broker?
In the simplest terms, a broker is a company that buys and sells according to the trader orders based on actual market prices. These companies earn by opening an account through fees they get from traders in exchange for their services.
We would like to you an idea of the services available and the fees that brokers ask for.
Forex Broker and License
When choosing a Forex broker, it must be authorized by the legislative and regulatory organizations, registered and approved; otherwise, it will be an “unregulated broker.” The accreditation of the Forex Broker by the regulatory authorities makes it far from any manipulation or deception in the relationship between it and the trader during the trades trade.
In the United States, when you are working as a broker, you should be registered with the Commercial Commission (FCM), with the Commodity Futures Trading Commission (CFTC), and also be a member of the NFA organization that was established to protect investors from fraud, manipulation, and abusive business practices.
You can verify the brokerage firm’s registration by phone (800) 621-3570 or by checking the NFA’s primary information section on the Internet via this link www.nfa.futures.org/basicnet/.
Forex Broker and NFA
It intensifies its efforts to educate investors about foreign exchange trading. The authority has issued an important booklet called “Trading in the Retail Off-Exchange Foreign Currency Market” and recommends that traders read it before trading Forex. And they have also designed a Forex Online Education Program, a program that explains how to open a forex account, the risks inherent in Forex trading, and the steps individuals should take when opening a forex account. Both the brochure and the online education program are freely available to the public.
Forex Broker – Customers Service
Forex is a huge financial market that operates 24 hours a day, so 24-hour support is a must! You can contact by phone, e-mail, chat, and other direct communication means. The quality of support varies drastically from one broker to another, so be sure to check them before opening an account.
Forex Broker Trading platform
All Forex brokers allow you to trade online via a relatively easy-to-use trading platform, which is the company’s backbone, and it must be organized and easy to use for the client. It is recommended that a demo account will be opened on it for training and discovering that platform’s features before opening the real trading account.
The design of the trading platform should include the following:
- A statement of the pairs’ actual prices with a brief account of your account showing the account balance and all the details of the transactions, whether winning or losing, with all accuracy, along with an explanation of the available margin and the used margin.
- Most of the trading platforms are web-based (Java) or based on a trading program that the client installs on his computer. You will not be able to access your account without the trading platform.
- Usually, “Download and Install Trading Software” facilitates faster account management, but most trading software is OS-specific. For example, most platforms need Microsoft to run Windows, and without it, you will not be able to install and apply the program, and you will have to use the Java system because it is through a web browser.
- Computer-based Java programs are preferred by most brokers who think they are more secure and reliable. And programs based on Java software tend to be less vulnerable to attacks from viruses and hackers.
It is always recommended to open a demo account and test the broker program before opening a real account!
Forex Broker Policies
You must know the broker’s policies and capabilities that should lead you to decide to open an account with it.
You must ensure the availability of currency pairs, which are represented in a minimum of seven of the major pairs (Australian and Canadian, Swiss franc, Euro, British pound sterling, Japanese yen, and dollar)
The lower the transaction costs (the spread), which are calculated by the point on the part of the broker, the greater the profits for the client, and you will find a difference in that matter between the brokers, for example, the desire to sell at the price of the EUR / USD pair, usually the three pip spread, but if you can find a two pip spread then this Best.
A lower margin (meaning higher leverage) and an increased likelihood of higher profits and losses arising from your margin use. Margin ratios range from 25% or more, and your lower margin use is fair in your trading. Remember that increasing the margin (leverage) is a double-edged sword that allows you to trade more broadly, but it is severe in the event of a loss.
Minimum trade size
The size of a trade or lot may vary a lot from one broker to another, and it usually ranges between the sizes of 1,000, 10,000, 100,000 units. There is a contract of 100,000 units called “standard,” There is a contract of 10,000 units called “mini.” There is a contract of 1,000 units called a “micro.” Some brokers give you the freedom to specify the size of the lot as you want.
Most brokers give you a margin (leverage) to be able to enter more trades despite the small size of your account, and you must know that the size of the margin is not less than 2%, i.e., 1:50.
Forex Trading Hours
Almost all brokers have their business hours corresponding to the GFM business hours from 5:00 PM EST on Sunday to 4:00 PM EST on Friday.
Other advantages of Forex broker:
1. Lower spreads.
In Forex trading (the spread), which is the difference between the buying and selling price between any two currencies, the lower spread saves your money.
2. Low minimum opening for an account.
The low minimum to open the account gives the advantage to include a larger segment of customers and enter the vastest number into the forex currency market, and it should not be less than $ 250. And recently, brokerage firms provided competition for the minimum amounting to 50 dollars only. But the smaller the amount of the account, the more you cannot trade in all the features of this enormous market and diversify the financial portfolio.
3. Immediate execution of orders.
This factor is critical when choosing a Forex broker. It is imperative not to delay the execution of orders so that you do not miss any opportunity in the market, and in the correct sense, you see what you can implement!
4. Charting and technical analysis tools.
Choose the broker that gives you access to the best chart and technology available for technical and fundamental analysis, and the ability to execute orders from the graph (chart).
Leverage will make the small trader as if he is a wealthy trader in Forex, but at the same time, it is a double-edged sword, and we never recommend choosing the broker that gives you the most massive leverage.